Thursday, April 19, 2007

Dumping, access and tariffs: issues that proved deadly to WTO talks

The Guardian

Guardian writers assess the five issues that divided the main players at the WTO summit, and what the collapse of the talks means for each:

· Farm subsidies

Poor countries were asking the west to cut the more than $300bn a year it hands out to its farmers, encouraging them to produce mountains of unwanted produce which is then dumped on world markets

But the EU balked at accepting a date for the phasing out of export subsidies, agreeing only to cap the most trade-distorting domestic payments, a concession that would have allowed western countries to continue other payments unchecked What it means:

The dumping will continue, with poorer farmers having to go on competing against heavily subsidised produce in the west

· Market access

Poor countries wanted the rich to cut tariffs on agriculture and textiles, particularly on processed products which attract punitive import duties. In return the west wanted access to developing markets for its own goods

The west made some concessions, but in exchange poor countries would have been forced to agree to cut their own trade barriers. The poorest countries, who proved highly reluctant to engage in tit-for-tat bargaining, won only vague promises of greater access

What it means:

Poor countries for now avoid being flooded with cheap food imports, including the dumping of subsidised food

· Emerging issues

The EU wanted new talks on foreign investment, competition policy, transparency in government procurement and trade facilitation, but faced fierce opposition from poor countries, who feared that new investment rules could tie their hands in setting rules for foreign multinationals

What it means:

Multinationals hoping for new investment rights will have to wait, while the power of governments to regulate remains undiluted

· Industrial tariffs

The EU and US want lower barriers to exports of their manufactured goods. The proposed tariff-cutting formula would have forced poor countries to make deeper cuts than the west, which already has low barriers

What it means:

Developing countries spared for now from the negative impact of premature trade liberalisation, which could have undermined local industries

· Cotton

Cotton has emerged as the issue which best symbolises the damage western subsi-dies inflict on poor farmers. Four west African countries - Burkina Faso, Mali, Chad and Benin - have asked Washington to cut the $4bn it spends each year subsidising just 25,000 US cotton farmers, which is more than the value of their combined harvest

But the WTO talks produced only vague promises of further consultations, with no mention of any deadline for phasing out export subsidies and no talk of any compensation for west African producers while the subsidies are still in place

What it means:

Western subsidies will continue to depress world prices and destroy the livelihoods of millions of west African farmers